ACCI has made inroads into the booming global logistics business for parts aftermarkets
The market for Light Commercial Vehicles (LCVs) and Medium Duty Vehicles (MDVs), produced by global automobile companies such as Mitsubishi, Toyota and leading Indian manufacturers such as Tata Motors, Ashok Leyland and Mahindra is poised to take off in the UAE and Kenya markets. This implies an uptick in the aftermarket spares parts and accessories business for these markets too.
Dubai Customs data shows that trade volumes in Dubai's automotive aftermarket have been growing year-on-year, with 2.25 million tonnes of tyres, batteries, engine components and systems shipped through the city-state in 2017, an 8.4 per cent growth over 2016 volumes.
Avvashya CCI Logistics Pvt Ltd (ACCI) is a subsidiary company of Allcargo Logistics, one of India's leading logistics companies. Through its extensive and wide network in India and across the world, ACCI offers the advantage of a complete, end-to-end supply chain management for aftermarket spares parts for the automotive sector, right from pick-up from the manufacturer's point of origin to delivery at customers / dealers' doorstep.
ACCI has already made its first foray into the Dubai and Kenya (east Africa) markets through its partnership with one of India's largest truck and bus manufacturers for end-to-end shipment and redistribution logistics of aftermarket spare parts. Recently, the company bagged the business to deliver truck and bus aftermarket spare parts for the manufacturer's expanding operations in these two geographies.
The client had been operating out of three warehouses in the Sharjah International Airport Free Zone. This means a mandatory height restriction which was limiting the inventory storage and handling capacity as the company's business grew.
Typically, cargo shipments from India to Sharjah get's offloaded in Jebel Ali sea route, and then transferred by barges to Sharjah. This entails an additional transit time of two to three working days. The conventional route has also meant higher costs. ''Each state has its own rules and regulations,'' explains Mahidar K, AGM — Solutions & Design — Contract Logistics, Avvashya CCI.
To overcome these issues and deliver an optimal solution, ACCI has created a state-of-the-art racked warehouse facility of around 12,000 sq ft area with 12 mtr height in JAFZA (Jebel Ali Free Zone), which will cater to 11 GCC countries and the local Sharjah market.
Apart from opening up more space in the new facility, this solution bypasses the barge route of shipping through Sharjah thereby reducing the turnaround time (TAT) and making the inventory available for sale much faster. Sharjah offers the same tax exemption that rest of the UAE provides.
As a result, the lead time of receiving a container from the time of dispatch from the client's plant has been reduced to 17-20 days from the earlier 22-24 days.
In addition to a faster TAT, ACCI's innovative solution also ensures better control over inventory and its redistribution to dealers and customers for the UAE market ''We can deliver a (local) shipment within three hours,'' says Mr Mahidar. Operating through Jebel Ali is also a seamless experience thanks to its technology readiness, which promotes faster online transactions compared to traditional paper-based logistical processes.
In addition to this, ACCI is currently in discussions with the government of Ras Al Khaimah for setting up a warehousing facility in the Ras Al Khaimah Economic Zone.
ACCI has already made its first foray into the Dubai and Kenya (East Africa), taking up the client's logistics work in Kenya, based out of Nairobi. Apart from being the largest economy in East Africa, Kenya is fast emerging as a hub for automotive manufacturing and trade in the region.
For seven years, the client had its own warehouses and distribution network, which was being handled by its local sales team. Now with the business growing, the client felt the need for a seasoned logistics partner. ''Inventory management and re-distribution is a big additional responsibility for sales professionals, and we help bring that expertise to the table,'' says Mr Mahidar.
ACCI has consolidated the client's four warehouses measuring 2,000 sq ft each with 5 mtr height into a single racked warehouse with 9,500 sq ft area and 11 mtr height, considering the customers business plan for the next five years he adds. The new warehouse is located around 12km away from Nairobi, Kenya's capital, on the road that connects it to the sea-port city of Mombasa.
These global forays follow a successful partnership with the client in India's North-East (NE) and North region for the last four years.
Replicating the end-to-end supply chain model in other countries, however, comes with its fair share of challenges, says Mr Mahidar: ''We operate in an unknown territory, compared to India. The local issues are very different from what we encounter back home.''
It is here that the variety and depth of ACCI's capabilities and the strengths built over the years come in handy. The key is in devising innovative and cost-efficient SCM solutions, backed by infrastructure capabilities and a dedicated team to deliver quantifiable benefits to clients.
Going forward, Mr Mahidar says that these capabilities equip ACCI to offer a larger bouquet of supply chain services to clients.Through its strategic presence at Dubai's JAFZA and Nairobi the company plans to tap into a wider opportunity that other global markets present. For example, Jebel Ali serves as a crucial hub for transshipments from countries like India and China to the USA and Europe. ''The spare parts for the vehicles are the same for Europe and the UAE. Through our Jebel Ali warehouse, we can also cater to European markets with faster TAT and greater cost efficiency,'' he says.
With the emergence of new automotive hubs across the world, the demand for specialised warehousing and logistics solutions is also poised to grow. This is a perfect opportunity for us to leverage our unique end-to-end logistics model and capabilities in expanding our global footprint
- Naresh Sharma, MD, Avvashya CCI